Appropriating Mortgaged Property to Charity

Trusts Discussion
1

I have a client who plans to leave their estate to a single charity but owns several mortgaged properties.

In potentially establishing life cover to facilitate appropriation of mortgaged properties to a charity on death, are there any issues surrounding to payment of policy proceeds to said charity? I.e. whereby the charity (rather than the estate) discharges the mortgages to facilitate appropriation..

There is of course no IHT so the motivating factor in consideration of a trust is speed.. there is otherwise no reason for the proceeds not to pass to the estate.

2

Does the testator know if the charity will accept the properties, or will merely look to sell them and receive cash in support of its objectives?

This might inform the client as to whether life cover will provide any real benefit in the administration of the estate.

If the charity is to take the properties, I suggest having the mortgages discharged from the estate would be the most straightforward option.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals